Bobby Peru 2020
Registered User
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Luckily I can remortgage for the remaining €230,000 though I’ll lose my tracker in the process.
thanks for that Brendan, really helpful. Obviously scenario 2 is more to my liking.Hi Bobby
The first question is what gift is she giving you, if any.
Scenario 1
You could argue that you have a house worth €480k with a mortgage of €230k, so the equity is €250k and therefore you should be paying her €125k for her half share in the equity.
So, if you don't pay her this, you could be seen as getting a gift of €125k.
The Capital Acquisitions Tax between siblings is €32,500
Therefore your CAT calculation would be
Gift €125k
Less €3k small gift exemption
Less €32,500 threshold ( assuming you have received no other gifts from siblings, aunts or uncles before)
Taxable: €90,000
CAT @33% = €30,000
Scenario 2
You could argue that as you have paid the mortgage, you are entitled to the equity in the house other than the increase in value. But there has been no increase in value as you paid €440k for it and spent €40k on it.
In this case, no CAT would be due.
Yes, mortgage was with KBC originally, but they wouldn’t play ball due to financial difficulties I found myself in back in 2017.Are you absolutely sure about this?
Which lender are you with?
If you meet the lending criteria for a loan of €230k, some lenders can make a decision to leave you on your tracker.
Having said that, it would take a lot of persuasion and a lot of time to get their agreement, and time seems to be of the essence here.
While a tracker is valuable, it's not as valuable as it once was.
With rates of 1.95% available, if your tracker margin is 0.75%, the loss of the tracker will cost you about €2,700 (1.2% of €230k ) in the early years but this cost will reduce quickly as you pay down the mortgage balance.
Brendan
But there has been no increase in value
This is what I find frustrating. It’s been in negative equity for a long time and only recently increased in value. I’m not in a position to sell, either financially or from a time in life aspect as we’ve put down roots, schools etc. It feels like I’m really paying for price increases that have no actual gain for me.And certainly worth much less than when she moved out in 2007.
In practical terms the question of how well or how badly you or your sister has done depends a lot on where you start and stop the clock. I have sympathy that you've been shouldering all of the burden but haven't seen any upside.This is what I find frustrating. It’s been in negative equity for a long time and only recently increased in value. I’m not in a position to sell, either financially or from a time in life aspect as we’ve put down roots, schools etc. It feels like I’m really paying for price increases that have no actual gain for me.
This is what I find frustrating. It’s been in negative equity for a long time and only recently increased in value. I’m not in a position to sell, either financially or from a time in life aspect as we’ve put down roots, schools etc. It feels like I’m really paying for price increases that have no actual gain for me.And certainly worth much less than when she moved out in 2007.
You're right. It really depends on what you recognise as the valuation date. Ideally for me it would be the date she stopped paying the mortgage and moved out of the house in 2008, That was after the crash and the market value would've been around €360K (negative €80K) and therefore not much of a gift at all. If you view the valuation date as when I could financially remove her from the mortgage then we'd be up to about €470KIn practical terms the question of how well or how badly you or your sister has done depends a lot on where you start and stop the clock. I have sympathy that you've been shouldering all of the burden but haven't seen any upside.
I think what you really need to know is a precise answer for CAT purposes. Hopefully another poster can help.
It feels like I’m really paying for price increases that have no actual gain for me.
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